Is pay the main motivating factor driving people? For most of the twentieth century, the belief was that people go to work to collect a paycheck and money was the main, or even the sole, motivator. In the twenty-first century, however, we now recognize that pay is not everything. For most people, money is an important motivator because it supplies many things from fulfilling basic needs (e.g., food and shelter) to providing higher education for one’s children and a means for retirement.

But people seek more than just a paycheck. People want to work in an environment of trust and respect, where they can have fun and develop relationships with others and do meaningful and interesting work. People also want to balance their work and home lives.

We can define a reward as something that increases the frequency of an employee action. In other words, when an employee is given a reward, we expect to increase the chances that specific results and behaviors will be repeated or improved. If pay raises are not producing this result, because they are not meaningful or are given arbitrarily, then they should not be viewed as rewards.

Similar to financial incentives, praise and recognition for a job well done, without a monetary value attached, can be a powerful reward. Many organizations underestimate the value and impact of nonfinancial rewards. They use the phrase “rewards and recognition” to mean that rewards are financial, whereas recognition is nonfinancial and not as meaningful.